Saturday, April 30, 2011

War of ideas

I’ve been comparing this election to 1991. Well there is another parallel with 1991. In retrospect, LKY’s premiership will be seen as the Cold War premiership even though admittedly less significant than him being seen as the founding father of Singapore the nation.

The Cold War was a war of ideas. Crudely, it was putting liberal democracy against what was called “communism”. Communism is supposed to be an enlightened utopia run by the proletariat. But it didn’t turn out that way, because the “provisional dictatorship” that was supposed to oversea this transition turned out to be worse monsters than the capitalist pigs they were replacing.

The end of the cold war, and the USA’s ascension to the greatest superpower there ever was sparked a mood of triumphalism throughout the 90s and the first half of the 00s. Books upon books were printed about the USA’s supreme economic, military and soft power. And the funny thing about it is how short-lived all that power was. The ink was hardly dried when the Great Recession took place.

Just as the Great Depression triggered a great deal of talk about the fall and decline of the West, so did the Great Recession. We won’t see a repeat of the Great Depression where there was a lot of (now seems misguided) admiration for fascism and communism, and it led us into the second World War. But Western values are similarly under threat. Instead of communist Soviet Russia and Fascist Germany, now the challenges to the ascendency of the West are China, India, and much of Asia. And to a lesser extent, Russia, Latin America and the Middle East. There may not be a world war, but these are realer threats to the superiority of the west. (In any case, the World Wars were the beginning of the downfall of the West, since it more or less destroyed colonialism.)

As I mentioned earlier, there is a war of ideas going on right now, no less than the Cold War era. And there are 2 major arguments.

Democracy vs dictatorship.

Winston Churchill said that “democracy is the worst form of government except all the other forms”, which is to say that it’s the least evil. But is that true? Nobody seriously thinks that democracy is a perfect form of government. Even those who advocate it state that it has a lot of flaws. But it will usually do the right thing in the end. True or false?

For a long while, this has been held to be true. The West performed better than the Communist bloc and seemed to put this argument to rest. But now we have the USA and Europe going through a massive fiscal crisis.

The fact is that no republic has ever lasted more than 300 years. It’s only been 200+ years since the independence of the USA. The biggest worry for any democracy is that the citizens will bilk out the treasury over time, and that does seem to be happening already. Democracies will not last in the long run because they always go broke.

There is no doubt that the people will decide what is best for their self interests when they focus on the long term instead of the short term (which is not true), when they receive the best information (which is not true, and it doesn’t matter how much information is pumped out over the media all the time because the signal to noise ratio is always there), and when everybody’s voices are heard, not merely those with the means to operate as political insiders (which is also not true).

The financial crises that are taking place in much of the developing world are a great rebuke to the workings of democracy. Somehow, it hasn’t been able to stop the income inequality from growing. It hasn’t been able to stop the rich from monopolizing the media. It hasn’t been able to stop unscrupulous bankers from dumping their toxic assets on unsuspecting people.

Admittedly things are not very much better in China. Most of what’s been reported in China is about the economic giant that it promises to become. China has been very successful in the last 10 years, but not for long enough for us to see how long its success can be maintained. There are all sorts of threats. Inefficiency of state owned enterprises. Lack of transparency.

The history of China, post 1949 is full of the horrendous mistakes that are made when leaders (I’m thinking about Mao Zedong) are not accountable for their actions. The Great Leap Forward that resulted in the greatest famine in history. The involvement in the Korean war which killed dunno how many Chinese soldiers. The Hundred Flowers Bloom campaign that wiped out all the intellectuals. The Cultural revolution. The laogai that sent so many people to the countryside. The Cold War with the Soviets, necessitating a massive expenditure to build fortifications on the border with Mongolia and Russia.

China’s greatest asset has always been the same asset that it has had for the last 4 thousand years – the people. Whenever the emperor cocks up, and the emperor has cocked up so many times in the history, it’s always the people who come to the rescue.

Ironically, the government in Singapore has never been more widely admired than it has over the last few years. Previously, a lot of talk about Singapore has been about the “Asian Values”, where we have a way of doing things (very little welfare, centralized control, export led growth, massive government role in developing the economy, death to the opposition) People in the West are looking at Singapore and thinking, “wow this place is so well run”. This is at a time when Singaporeans are getting increasingly disgruntled with the government.

Democracy, on paper is about how you would get the government replaced when it fails to do its job. But having an alternate government who can step in to replace the old one is not very useful when:

1. The alternative is no better than the incumbent, or2. There is no viable alternative, or3. We live in a political environment where the government, or any conceivable replacement, is losing its ability to do its job.

Ultimately a lot of the questions about democracy are centred around the form of the government. But they don’t directly address a more important issue, that for some reason, political analysts are not very keen to answer, because they are ancillary to the power grab. That question is, “What makes a cabinet perform better?”

Why would a cabinet automatically perform better when it knows that it will be replaced after the next election? Or will this encourage it to be cynical and engage in vote buying in order to get the best returns in the short run. Is it actually possible that the PAP has been an honest government for a long time because it knows that its position is secure, and it might as well do a good job anyway, since it will be around for the long run?

If it knows that it can be voted out of power at any time, then wouldn’t that sour its relationship with the people? Would that make the cabinet do its job with less heart?

Ultimately it does matter whether your leaders are good people. As LKY has shown, dictatorship need not need be a bad thing if your dictator has a good heart and has sound policies. And many countries who are democratic get lousy governments anyway. The question is, are the leaders in it to serve the people or are they there to serve themselves? Because all the competence in the world is not going to make you a better person if you're mainly in it for yourself? How do we get rid of the people who are in it for themselves?

It may well be that paying the ministers a million dollars a year is an unconvincing answer to these questions. But when you don’t pay the head of state a million dollars a year, you might end up with somebody like Tony Blair, who more or less allows business interests to take over the running of the government.

Free market vs government intervention

The winning of the cold war also seemed to favour the idea that the less government intervention in the market, the better. This idea seemed to gain currency towards the end of the Cold war. It’s the neo-liberal economy.

Basically people have argued that it’s best to let the market take care of itself, and that the market is a self-regulating system. Therefore: out with social programs. Out with the rich paying higher taxes. Out with government regulations on businesses. Out with increasing wages for the middle class.

These ideas gained ascendency with the regimes of Margaret Thatcher and Ronald Reagan. A lot of social programs were dismantled under their watch. This led to a great stock market boom that lasted from 1982 to 2008. It was also responsible for plenty of economic crises, for example the Asian financial crisis, the currency runs in Russia, Argentina and Brazil, the fiscal crises in some countries in Europe, and finally the Great Recession.

It’s also largely responsible for the widening gap between the middle class and the top 1%. Most of the economic gains in the last 20-30 years have gone to the top 1%.

I think that a lot of the neo-liberalist ideas have been adjusted as such: people are now acknowledging that governments have a role to play in running the economy. That regulation has been extremely lax. Budding industries need a lot of subsidies by the government to get their feet off the ground. It’s only after they have established themselves, that they should be weaned off subsidies, and after that they can compete in the big bad world.

But in Asian countries where the government has had a big say in the economy, something interesting has happened. The line between the government and the economy is fading, if it hasn’t disappeared altogether. In Singapore it’s not a disputed fact that a large part of our economy that is not run by multinationals is run by government linked companies. That a lot of functions that used to be previously run by the government is now privatized. Is this a good thing?

There are problems with this. First, it concentrates wealth and power (since they are now interlinked) in the hands of the insiders. Do you need regulation changed so that you can do your business better? No problem. You change this regulation for me, and I will give you a nice directorship when you leave the government. Now, this is not corruption, the way that corruption is officially defined. But we would agree that there is something, if not dishonest, fairly improper about this. Then other companies outside who wish to compete are no longer playing on a level field.

Secondly, it shields the government against accountability. When functions that were originally done by the government gets transferred into holding companies, then that function is no longer accountable to the public. If your utilities companies get privatized, then the government is officially not culpable and accountable if anything goes wrong. Then again, there are many things that in the minds of people are still connected with the government, no matter what. If the utilities provider fails, people will still blame the government, regardless of whether the company has been privatized or not.

Anyway, in any case, business has always been a dictatorship. It wasn’t built to be democratic. There is some democracy at the board level, but you can always remove a troublesome director when it suits your purpose. You can have a democracy where ostensibly the government is responsive to the needs of the people, but then politicians would be so dependent on campaign donations and funding by corporations that you can never hope to win a popular election without being in cahoots with big business. So democracy is distorted. In the other model, you can have the authoritarian government, and the government and the businesses can influence each other to a great extent, but the will of the people are not reflected at all, save for a Tiananmen style uprising.

Because of the wealth and the power of big businesses, they have an increasing say in what goes on in the governments. Increasingly you can make policies that are more pro-business, but less pro-worker and less pro-consumers. You can make the average citizen pay more in taxes but give tax breaks to the big businesses. You can drive down the bargaining power of the average worker. All in the name of “attracting foreign investment”, because everywhere around the world, businesses are using the fact that they are mobile to force these changes through. It used to be “workers of the world unite”. But quite obviously, and in spite of the internet, they are increasingly unable to do so. It’s more like “corporations of the world unite”.

And not to absolve the governments of their complicity in this, but in this environment, governments have increasingly little say on the issue of worker’s rights. But they should be putting up a stiffer fight, rather than collapsing in front of the might of business, as they have done in the last 20-30 years. And you don’t have to buy into that baloney that worker’s rights is bad for the economy, because you can always look at Germany and Sweden.